As per expectations, the prices of diesel and petrol have been hiked in India and will be effective by midnight. The prices of diesel have been hiked by 45 paise and the prices of petrol have been hiked by Rs. 1.50 per liter according to reports.
However, the hike does not have anything to do with the local sales tax or value added tax (VAT), so the effective hike for customers will be more than the quantum which has been announced. The petrol prices in Delhi will go up by almost Rs. 1.80 per liter after taking in to account a 19 percent VAT. The rates of diesel will also go up by 51 paise.
Thus petrol in Delhi will cost Rs. 69.05 per liter, while diesel will cost Rs. 48.16 per liter. Before the price hike, the Indian government had given state-owned oil companies the right to increase the prices of diesel and petrol by 40 paise to 50 paise per month till the rates come in line with those observed globally.
The recent price hike is the 20th for petrol since fuel was deregulated. Under the deregulation, oil firms are now free to decide on the quantum and the frequency of price changes. The price of petrol was recently revised in the month of January, 2013.